Enjoy your March 8th hand-crafted Brew!
QUOTE OF THE DAY
“I am working on a new system where there will be competition in the Drug Industry. Pricing for the American people will come way down!” — President Donald Trump, calling out pharma on his ever-notable Twitter account. Pharma has been a frequent target of Trump, and he’s not showing signs of letting up.
Market Snapshot
- U.S. markets fell again yesterday for the first back-to-back drop since January, spurred by downturns in healthcare, energy and telecom. Snap was among the biggest losers, falling 9.8%, the second big drop for the company post-IPO
Guilty as Charged
…ZTE to pay $892 million over sales to Iran and North Korea. For background: ZTE was the subject of a five-year investigation where the Chinese telecom giant was charged with conspiring to obtain technology products from the U.S., incorporate them into ZTE equipment and ultimately send them to Iran. If that wasn’t bad enough, the company was also charged with helping send shipments of telecommunications equipment to North Korea. Due to U.S. sanctions against the two countries, that’s not gonna fly. Rather than letting the case drag on, ZTE decided to plead guilty and eat one of the largest penalties ever in a sanctions case. On to better days.
Imports: 1, Exports: 0
…The U.S. trade deficit surged in January. The trade deficit measures how U.S. exports stack up against imports. The latest? Imports are winning, and winning big. While exports grew slightly, a flood of imported cell phones, foreign cars and oil contributed to Uncle Sam’s biggest monthly trade gap since 2012. It’s not all bad though: increases on both sides signal strengthening U.S. demand and economic growth abroad. That said, the hefty deficit poses a challenge to the economic goals of the Trump administration, so stay tuned to see how the Donald and his squad approach future trade deal renegotiations.
Google Continues to Rule With an Iron Fist
…And its enemies are out for blood. Let’s recap—Google (+0.50%) got off on the wrong foot when it was accused of skewing internet results three years ago. Then last year, the search engine giant was accused by the EU of using its dominant position with its Android operating system to push rivals out of the picture. Yesterday, several companies filed a complaint to the EU stating that Google had imposed contractual constraints that made it “virtually impossible to produce Google-free devices.” We wish Google the best of luck finessing its way out of that one.
Hype for Hyperloop
…The surreal technology is starting to become real. Hyperloop One’s track in Nevada is the first of its kind, able to support a full-scale pod to carry people and cargo. The company has ambitious plans to transport between places at near supersonic speed—which is actually happening. Images released yesterday give insight into the progress of what looks like the mobility system of the future. Oh yeah, we almost forgot to mention…it’s another Musk venture. The guy is everywhere.
Other Stories
- Uber CEO looking for a COO to help lead company
- Tinder has been operating a members-only, high profile version called “Select”
- Grocery startup Instacart raises funding at a $3.4 billion valuation
- Private equity firm Apollo works to raise $20 billion fund by May
Economic Calendar
- Monday: Factory Orders (+)
- Tuesday: Boingo Wireless (+), Dick’s Sporting Goods (+), H&R Block (-), Urban Outfitters (-) Earnings; Consumer Credit (+)
- Wednesday: Adidas, Vera Bradley Earnings; Private Employment Report
- Thursday: Domino’s, El Pollo Loco, Signet Jewelers Earnings
- Friday: Vail Resorts Earnings; March Jobs Report, Treasury Budget
Central Banks Stockpile Foreign Reserves
In 2014 and 2015, most central banks in emerging markets decreased their levels of foreign currency reserves as their economies grew. 2016 saw a big reverse in that trend, perhaps signaling that central banks aren’t as bullish as the stock market right now. Why? Reserve levels act as defenses against possible shocks in the economy. Let’s dive into the numbers:
- Of the 30 largest emerging markets, two-thirds of their central banks increased reserves in 2016. Reserve levels hit record highs in Israel, Vietnam and the Czech Republic.
- China saw significant change, as reserve levels increased by $6.9 billion in the month of February alone, the first monthly increase in eight months. Russia also added $13 billion to its reserves in January, its largest monthly increase in over four years.
- So what exactly does this mean? Essentially, central banks are nervous about political uncertainty and want to hedge against risk. Watch for elections this year in France and Germany to continue this trend of hoarding foreign currencies—especially the Swiss franc and U.S. dollar.
Trivia Answer
The answer is a) – It may come as a shock, but most companies are started with only $10,000 to $30,000 in initial funding, usually from the founder’s savings or from friends and family. It’s a common myth, often fueled by high-dollar funding rounds for a small number of companies, but let’s remember that not only are large raises like these a rarity, but venture capitalists typically won’t invest until a bit later in the life of a business.
The idea of starting a business and raising money may be in your future, and we want to give you the tools to take your idea to the next level. Through edX.org, MIT (never heard of it) offers an incredible and free online course about entrepreneurship. This is a no-brainer Brewers. Check out Becoming an Entrepreneur HERE.
Interview Question of the Day
There is a bag which has 21 blue balls and 23 red balls. You also have 22 red balls outside the bag. Randomly remove two balls from the bag. If they are of different colors, put the blue one back in the bag. If they are the same color, take them out and put a red ball back in the bag. Repeat this until only one ball remains in the bag. What is the color of the sole ball left in the bag? (Answer)
Business Person of the Day
Waffle House co-founder Joe Rogers Sr. died at the age of 97 on Friday. Rogers Sr. and Tom Forkner opened their first Waffle House in Avondale Estates, Ga., on Labor Day in 1955. The chain now has 1,900 restaurants and approximately 40,000 employees. Love them waffles.
Food for Thought
At the Geneva Motor Show (not to be confused with the Geneva Convention), tire makers are literally reinventing the wheel to make it as profitable as possible. Goodyear presented its Eagle 360 Urban, a concept tire designed for an imagined future when cars drive themselves, move sideways to maneuver into tight parking places and even change lanes at right angles. Flying cars might have to wait.
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